Dozens of Russian diplomats and their spouses living and working in New York have been charged with defrauding the Medicaid system of about $1.5 million in benefits over a nine-year period, federal prosecutors say. News 4's Chief Investigative Reporter Jonathan Dienst reports. (Published Thursday, Dec. 5, 2013)

Dozens of Russian diplomats and their spouses living and working in New York have been charged with defrauding the Medicaid system of about $1.5 million in benefits over a nine-year period, federal prosecutors say.

Twenty-five current and former Russian diplomats, along with their spouses, allegedly spent tens of thousands of dollars on luxury vacations as well as jewelry and clothing at Bloomingdale's, Tiffany's and other retailers. They also spent thousands of dollars online to buy merchandise including Apple products and concert tickets, prosecutors say.

A federal criminal complaint filed in U.S. District Court in Manhattan says the alleged scheme by 49 diplomats and their spouses included submitting false applications for Medicaid benefits associated with medical costs for pregnancy, birth and young children, benefits they were not entitled to receive.

The 18-month investigation by the FBI revealed a pattern of fraudulent Medicaid application submissions by the defendants, including under-reporting household income and false statements about the citizenship status of children in order to continue dependents' health care coverage, prosecutors say.

Court papers say 92 percent of the births to Russian diplomats and their spouses between 2004 and 2013 in New York City were paid for by Medicaid benefits.

Eleven employees of the Russian diplomatic mission on East 67th Street are among those criminally charged and have diplomatic immunity. The FBI said no arrests were made Thursday.

Each defendant is a current or former Russian diplomat or spouse of a Russian diplomat employed either at the Russian Mission to the United Nations, the Russian Federation Consulate General in New York or the Trade Representation of the Russian Federation on the USA, New York Office, prosecutors say.

The State Department said it was still reviewing the charges and could not say whether the Russians have been asked to lift diplomatic immunity.

Those named in the criminal complaint unsealed Thursday include Andrey Demin, identified as a counselor at the Russian mission, and Andrey Savushkin, who works as a diplomat at the Russian Embassy in Washington, officials said. The complaint alleges Timur Salomatin, a former Russian diplomat at the United Nations, claimed he was earning $3,000 a month, rather than his actual monthly income of $5,160, in order to qualify for Medicaid benefits.

The diplomats are charged with conspiracy to steal government funds and making false statements.

U.S. Attorney Preet Bharara called the conduct of the diplomats “shameful” and a matter of “systemic corruption” at the Russian mission.

“Diplomacy should be about extending hands, not picking the pockets of the host country,” Bharara said.

Sergey Kuryatnikov, a spokesman at the Russian Mission to the United Nations, said the ambassador had no comment on the charges.

“These defendants allegedly perpetrated a fraud to illegally obtain Medicaid benefits to which they were not entitled,” said FBI New York Director George Venizelos.